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144Start of a New Trend? Pullback in Subprime Loans Observed http://newsroom.transunion.com/start-of-a-new-trend-pullback-in-subprime-loans-observed/
http://newsroom.transunion.com/start-of-a-new-trend-pullback-in-subprime-loans-observed/For the first time since 2012, originations to subprime consumers declined year-over-year for a number of major credit products, according to TransUnion’s (NYSE:TRU) Q2 2017 Industry Insights Report. The report, powered by PramaSM analytics, found that 4.63 million subprime consumers originated an auto loan or lease, personal loan or credit card in Q1 2017. Comparatively, 4.89 million subprime consumers originated one of these products in Q1 2016.

“Across product lines, we saw a decline in subprime originations at the beginning of 2017, and for the first time in a number of years we observed this for consecutive quarters,” said Ezra Becker, senior vice president of research and consulting for TransUnion. “Immediately following the recession, many lenders pulled back on subprime originations to control delinquency. As the economy recovered, lenders loosened their underwriting standards and allowed more subprime consumers greater access to credit. It appears that this trend may now be changing, though it is a much different environment than what we observed just after the recession. The economy is performing well, and after several years of increased subprime lending, some lenders may simply be taking a pause.”

Credit Product – Timeframe

Subprime originationsin Q1 2017

Subprime originationsin Q1 2016

Year-over-yeargrowth rate

Auto loans and leases

1.10 million

1.20 million

-8.9%

Credit cards

2.66 million

2.71 million

-1.8%

Personal loans

882,303

987,263

-10.6%

In Q1 2017, subprime personal loan originations declined 10.6% year-over-year, compared to a positive annual growth rate of 11.0% in Q1 2016. This marks three straight quarters of year-over-year declines in originations. More than 100,000 fewer subprime consumers opened a personal loan in Q1 2017 than in Q1 2016.

In fact, personal loan originations declined for all risk tiers, but at lower rates than for subprime originations. Total originations dropped 6.9% from 2.99 million in Q1 2016 to 2.78 million in Q1 2017.

“A combination of factors have influenced the decline in subprime personal loan originations. For example, FinTech lenders faced funding challenges in Q2 2016,” said Becker. “After years of growth in auto lending for subprime consumers, not surprisingly we observed an uptick in auto delinquency. Higher delinquency rates have long been anticipated as the result of that credit expansion. The reduction in subprime auto lending is a natural reaction to the emergence of that increased delinquency.”

In the credit card market, subprime originations declined by 1.8% to start 2017, the second consecutive quarter of decline. Since 2014, subprime originations had increased at a rapid rate, averaging growth of 29.2% in the first quarters of 2014, 2015 and 2016. In Q1 2017, subprime originations declined at nearly the same rate as total originations (down 1.9%).

Auto loan originations declined 8.9% year-over-year from Q1 2016 to Q1 2017. Originations to subprime consumers dropped to 1.10 million in Q1 2017, down from 1.20 million in the first quarter of 2016. At the same time, total originations declined just 2.9% to 6.73 million in Q1 2017.

“Consumers with subprime credit who want to increase their likelihood of credit approval, or secure more favorable lending terms, should focus on building their credit,” said Heather Battison, vice president of consumer communications for TransUnion. “Consistently paying bills on time, even if just the minimum due, combined with regularly monitoring your credit report, both go a long way toward achieving and maintaining credit health.”

Mortgage Delinquency Rate Drops to New Low since Recession

The mortgage delinquency rate reached the lowest level since the recession in the second quarter of 2017, dropping below 2% for the first time in almost 10 years. The mortgage delinquency rate was 1.92% in Q2 2017, down 16.5% from 2.30% in Q2 2016.

“In the second quarter, we hit a new milestone for mortgage delinquencies as the rate dropped below 2%,” said Joe Mellman, senior vice president and mortgage business leader for TransUnion. “Because delinquency rates reached 7% in the recession, mortgage delinquency has taken longer to recover. We’re now at the lowest delinquency levels in nearly a decade, and we anticipate those levels will remain low through the rest of this year.”

Viewed one quarter in arrears, mortgage originations remained relatively steady year-over-year in the first quarter of 2017. Up slightly from 1.46 million in Q1 2016, mortgage originations reached 1.49 million in Q1 2017. Largely due to the rise in interest rates, originations declined 28.3% between Q4 2016 and Q1 2017. A year prior, originations only declined 9.4% between Q4 2015 and Q1 2016.

More than 83% of mortgage originations were in the prime and above risk tiers in the first quarter of 2017. Market share of prime and above risk tiers has remained roughly in that range since Q4 2013.

The average new account balance, also viewed one quarter in arrears, declined 1.6% from $223,262 in Q1 2016 to $219,743 in Q1 2017. “Average new account balances tend to be larger for refinance transactions as opposed to purchase transactions, because consumers with higher loan amounts can realize greater benefits from lowering interest rates and/or loan term extension,” added Mellman. “As interest rates rise, refi activity declines. This year, we have observed that reduction, leading to lower average new account balances.”

Trends in the Mortgage Market

Mortgage Lending Metric

Q2 2017

Q2 2016

Q2 2015

Q2 2014

Delinquency Rate (60+ DPD) per Borrower

1.92%

2.30%

2.82%

4.02%

Average Debt Per Borrower

$198,045

$192,749

$188,504

$187,999

Prior Quarter Originations*

1.49 million

1.46 million

1.48 million

1.03 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Total Credit Card Balances Rise Following Rich Credit Offers in 2016

The latest TransUnion Industry Insights report found that total credit card balances continued their steady year-over-year increase in the second quarter of 2017. Total card balances reached nearly $714 billion, up 7.8% from $662 billion in Q2 2016. The average balance per consumer grew 3.3% to $5,422, up from $5,247 in Q2 2016.

“Total credit card balances continued to climb in the second quarter, driven by growth in super prime card balances,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion. “Throughout 2016, lenders provided rich offers to these consumers, and we saw a spike in super prime originations as a result. Now, we are observing super prime consumers using their credit and growing their card balances.”

The credit card delinquency rate reached 1.46% in Q2 2017, up 13.2% from 1.29% in Q2 2016. This brings the card delinquency rate above the average Q2 delinquency reading of 1.27% for the last three years.

“We predicted a slight rise in the credit card delinquency rate as a result of the growth in non-prime access over the last few years,” added Siegfried. “Performance in the energy-dependent states has stabilized, and this increase is in line with expectations. While this increase may seem large, delinquency levels remain well below the 3% delinquency rates observed immediately after the recession.”

Trends in the Credit Card Market

Credit Card Metric

Q2 2017

Q2 2016

Q2 2015

Q2 2014

Delinquency Rate (90+ DPD) Per Borrower

1.46%

1.29%

1.20%

1.31%

Average Debt Per Borrower

$5,422

$5,247

$5,197

$5,228

Prior Quarter Originations*

14.98 million

15.28 million

13.49 million

12.13 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Auto Delinquency Rate Rises after Years of Non-prime Origination Growth

“For the past several years, lenders have offered more financing opportunities to non-prime consumers,” said Brian Landau, senior vice president and automotive business leader for TransUnion. “As a result, we expected to see a slight rise in delinquency. It’s important to note that we still remain at very low levels of auto delinquency, but we will continue to monitor this trend.”

Viewed one quarter in arrears, auto originations declined to 6.73 million in Q1 2017, down 2.9% from 6.93 million in Q1 2016. This marks the third consecutive quarter of year-over-year declines in auto originations and the first decline in origination growth in any first quarter since 2010.

“Lenders have also raised concerns about the downward pressure on used car values, and we are beginning to see this impact origination growth,” added Landau. “Despite this decline, total auto balances continued to increase in the second quarter of 2017.”

Total auto balances achieved a new high in Q1 2017, reaching $1.145 trillion. The total balance was up 6.9% from $1.072 trillion in Q1 2016.

Trends in the Auto Market

Auto Lending Metric

Q2 2017

Q2 2016

Q2 2015

Q2 2014

Delinquency Rate (60+ DPD) Per Borrower

1.23%

1.11%

1.00%

1.09%

Average Debt Per Borrower

$18,486

$18,177

$17,699

$17,127

Prior Quarter Originations*

6.73 million

6.93 million

6.51 million

6.23 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

In the second quarter of 2017, the personal loan delinquency rate declined to the lowest level since 2009. The delinquency rate was 3.02% in Q2 2017, an 8.5% decline from 3.30% in Q2 2016.

“After a difficult 2016 for many FinTech lenders, we observed growth and stabilization in key metrics such as balances, delinquency and consumer participation,” said Jason Laky, senior vice president and consumer lending business leader for TransUnion. “More than 16 million consumers now have a personal loan, and we expect this trend to continue as more banks and credit unions re-enter the personal loan market.”

Personal loan balances achieved a new milestone of nearly $107 billion in Q2 2017, growing 10.8% over Q2 2016, when total balances were $96 billion. While balances increased, the growth rate was lower than the average Q2 growth rate of 24.7% for the past three years. The average balance per consumer also reached a new high at $7,781 in the second quarter, up slightly from $7,745 in Q2 2016.

Personal loan originations, viewed one quarter in arrears, declined 6.9% to 2.78 million in Q2 2017, compared to 2.99 million in Q2 2016.

“The personal loan market continues to grow, but with the pullback in non-prime originations offset by a shift toward prime plus and super prime consumers. At the beginning of 2017, the larger loans taken by the most creditworthy consumers helped drive balance growth and higher average borrower debt, while lowering overall delinquency,” said Laky.

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric

Q2 2017

Q2 2016

Q2 2015

Q2 2014

Delinquency Rate (60+ DPD) Per Borrower

3.02%

3.30%

3.32%

3.68%

Average Debt Per Borrower

$7,781

$7,745

$7,102

$6,501

Prior Quarter Originations*

2.78 million

2.99 million

2.63 million

2.40 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

]]>TransUnion,financial services,IIRWed, 16 Aug 2017 08:34:47 -0500December 2016 Fed Rate Hike: Most Consumers Fared Well, But It’s a New Dynamic for Consumers and Lenders Alike http://newsroom.transunion.com/december-2016-fed-rate-hike-most-consumers-fared-well-but-its-a-new-dynamic-for-consumers-and-lenders-alike/
http://newsroom.transunion.com/december-2016-fed-rate-hike-most-consumers-fared-well-but-its-a-new-dynamic-for-consumers-and-lenders-alike/TransUnion (NYSE:TRU) released an analysis today showing that most borrowers were able to absorb their increased monthly payment obligations after the Federal Reserve Board rate hike last December.

TransUnion’s study identified these 63 million consumers because they carried debts for which the minimum monthly payment due was tied to the market interest rate, such that a rise in rates from the December rate hike could cause an increase in payments required. TransUnion used its CreditVision® aggregate excess payment (“AEP”) algorithm, which incorporates monthly payments from mortgages, credit cards and other debt obligations, to identify 10.6 million of these consumers who were at elevated risk of not having the capacity to absorb a rate increase of 0.25%.

The study then tracked the performance of these consumers through the end of March 2017, to give the December rate increase enough time to affect payment obligations. The study found that, in fact, only one million of these consumers were delinquent at the end of March. This was slightly lower than the study’s control group, who had no variable-rate products. This result implies that consumers with variable-rate credit were able to manage the rate increase as well as, or better than, consumers without variable-rate products.

“When we announced our ‘capacity to absorb a rate increase’ metric last May we said that it was a conservative measure of risk, in that it did not account for contributions to savings or investments that could be reallocated to cover debt service increases,” said Ezra Becker, senior vice president of research and consulting at TransUnion. “We described our metric as an upper bound on the number of consumers who would struggle with a rate increase. We’re pleased to see that only 10% of those consumers we had considered at elevated risk of payment shock from a rate increase exhibited delinquency over the study period. Most consumers appeared able to reallocate their available cash, or make small changes to their spending habits, to effectively absorb the December rate increase.”

TransUnion’s study further found that of those one million consumers with delinquency in March, 70% had higher balances at the end of the study than they did in November. “Minimum payments are as much a function of balances as they are of rate,” continued Becker. “Increased balances can lead to liquidity constraints regardless of how rates move. Consumers should always be careful to manage their credit usage within the limits of their income.”

TransUnion’s control group of approximately 44 million consumers held no variable-rate credit products, and hence had no vulnerability to rate increases, over the same time period. Interestingly, 5.6 million consumers in the control group (13%) showed delinquency on at least one product by the end of March. In fact, the control group showed higher delinquency rates than the test group even when controlling for credit score.

For example, 443,000 of the 1.26 million subprime consumers identified as having elevated risk from a rate increase in the test group (35%) were delinquent in March. In contrast, 2.78 million of the 4.89 million subprime consumers in the control group (57%) were delinquent at the end of the first quarter. “It was really surprising to us that the control group exhibited greater delinquency rates than those vulnerable to a rate increase in our study,” said Becker. “There are clearly some interesting dynamics at play here that we don’t yet fully understand, but this initial study does seem to indicate that the 0.25% interest rate increase in December did not drive any material delinquency in the immediate term for consumers.”

Even so, TransUnion offered some words of caution for both consumers and lenders. The study only provides an analysis of immediate-term impacts from the rate increase, and does not explore how consumers might be impacted over a longer period. For example, consumers meeting their payment obligations in the months after a rate increase by dipping into savings might eventually exhaust that source of funds. As well, the study only evaluated a 0.25% rate increase—larger rate increases could have more material impacts on consumer credit performance.

“It is important for both lenders and consumers alike to be cognizant that a rising-rate environment presents a different dynamic than a steady-state or falling-rate environment. For lenders, a rising-rate environment does present the risk of default due to payment shock. For borrowers, there is now a need to recognize and plan for the fact that rising rates may cause their monthly payment obligations to increase. The key for both parties is awareness and planning.”

“Above all else, consumers should keep in mind the foundational principles of credit health, which are especially crucial when working to build credit,” said Heather Battison, vice president of consumer communications at TransUnion. “It’s imperative to make the minimum payment due, on time, on all of your bills.”

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide. www.transunion.com/business

]]>TransUnion,financial servicesThu, 20 Jul 2017 05:00:00 -0500Consumers Place Personal Loans Atop the Credit Mountain http://newsroom.transunion.com/consumers-place-personal-loans-atop-the-credit-mountain/
http://newsroom.transunion.com/consumers-place-personal-loans-atop-the-credit-mountain/New TransUnion study finds struggling consumers who possess multiple credit products tend to pay their unsecured personal loans firstWhen faced with the choice of which debts to pay and which to miss, consumers in financial distress tend to prioritize unsecured personal loans ahead of other credit products such as auto loans, mortgages and credit cards. These findings were released today during TransUnion’s annual Financial Services Summit, attended by more than 300 senior-level financial services executives from around the globe.

The most recent study incorporates unsecured personal loans for the first time since TransUnion began analyzing the payment hierarchy dynamic in 2010. Beyond personal loans, this most recent analysis is consistent with prior TransUnion studies in finding that consumers have historically prioritized auto loans over their mortgages and credit cards, and have done so consistently since at least the beginning of 2004.

“It is quite surprising to us that, for most struggling consumers, unsecured personal loan payments are prioritized over other prominent credit products such as mortgages and auto loans,” said Ezra Becker, senior vice president and head of research for TransUnion’s financial services business unit. “While personal loans have existed for a long time, recent growth in the number of such loans led us to explore this product’s position along the payment spectrum. The prioritization of personal loan payments above all others is counterintuitive, but our study results are clear. We believe the relatively short duration of these loans—usually less than 30 months—is a key factor in the decision process of consumers.”

*Delinquency rates after 12 months for consumers who possess and are current on all four credit products at the beginning of the respective performance measurementperiod.

Recent TransUnion data show that average term lengths are much shorter for unsecured personal loans. For loans originated in Q4 2016, unsecured personal loans had an average term of 28 months. In this same timeframe, the length of auto loans averaged 60 months and mortgages averaged 230 months.

“We conjecture that personal loan borrowers may feel they can get a quick win with these loans even when they are struggling, and there is a clear, near-term end to the obligation—a ‘light at the end of the tunnel,’ in a sense,” said Becker. “In contrast, auto loans and mortgages have much longer terms, and credit cards have no set end date. Finding an opportunity to pay a debt in full can be a powerful motivator for a struggling consumer.”

Historical Payment Patterns “Shocked” During Great Recession

Prior to including unsecured personal loans in the payment hierarchy analysis, TransUnion had reviewed payment patterns for auto loans, credit cards and mortgages. Since at least 2004, consumers with an auto loan, credit card and mortgage have prioritized their auto payments. Mortgages have traditionally been the second payment made, followed by credit cards.

“Auto loans have traditionally been the prioritized payment because most people need a car to get to and from work, run errands or bring their kids to school or other activities,” said Nidhi Verma, senior director of research and consulting in TransUnion’s financial services business unit. “The far majority of the population does not live in markets such as downtown New York or Chicago, which have strong public transportation infrastructures. Viable alternatives to owning a car are scarce, hence the need to keep up with auto loan payments.”

This dynamic changed dramatically during the Great Recession as the housing crisis devalued millions of homes. As a result, the payment hierarchy flipped in Q3 2008, with consumers paying their credit cards prior to their mortgages. “As housing values began crashing in 2007 and 2008, many homeowners found themselves ‘underwater’ on their mortgages, meaning they owed more on their mortgages than the value of their homes. With unemployment sharply rising, a lot of these borrowers began to emphasize their credit card payments, protecting their liquidity as a vehicle to pay their bills or simply to put food on the table,” added Verma.

This trend lasted well into the housing market recovery, reverting to the historical norm in Q1 2014. “The payment hierarchy is complex—the decision process for struggling borrowers is a difficult one. We confirmed through our study that both the strength of the labor market and housing values continue to be critical drivers of that decision process. In addition, the timing of consequences, availability of alternatives and social stigma all play a role. The housing crisis was a shock to the system that we fervently hope was a once-in-a-lifetime occasion. Barring another such trauma to the consumer credit market, we believe financially constrained borrowers will tend to pay their personal loans, auto loans, mortgages and credit cards in that order,” concluded Becker.

TransUnion observed yearly credit performance for consumers who possessed at least one active auto loan, credit card, mortgage and unsecured personal loan, and were current at time of study selection. Such consumer cohorts were identified in every quarter between 2009 and 2015, with performance evaluated after 12 months. As an example, delinquency rates for the Q4 2015 cohort were evaluated as of the end of 2016. On average, TransUnion studied approximately two million credit-active consumers with this specific wallet profile in each quarterly cohort.

About TransUnion (NYSE: TRU) Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide. We call this Information for Good. http://www.transunion.com/business

Maneuvering through this ever-changing credit landscape is difficult for lenders of all sizes, ranging from credit unions to regional banks to the largest financial institutions. To help navigate through this complex maze, TransUnion today introduced the newest modules in its PramaSM environment – Benchmarking and Data Extract.

"The future of lending is here; advanced analytics and tools are readily available to help all lenders make smarter decisions,” said Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit. “The latest Prama modules give our customers a significant advantage – the ability to gain deeper insights into their own portfolios while comparing their books of business to peers at speeds that were unfathomable as recently as last year.”

Prama Benchmarking provides advanced data analytics and visualization capabilities specific to the auto loan, credit card, mortgage and personal loan markets—to deliver relevant insights for each line of business. Lenders will now be able to measure their performance across numerous metrics and filters, and compare it to the industry and their peers. This information can be used to improve how financial services companies segment, target, acquire, cross-sell and retain customers. The Data Extract module provides self-service access to query against 100 percent of TransUnion depersonalized archive credit data, allowing customers to receive faster delivery of data to support their own analytics—in their own environment with their preferred tools.

The Benchmarking and Data Extract modules are the latest additions to the Prama environment, which already includes Market Insights, Vintage Analysis and Attribute Manager. Prama offers a uniform user experience that allows customers to easily navigate key elements of the holistic suite such as self-service on-demand access, unprecedented quantities of data and industry/peer benchmarking.

Measuring Business Performance Against Peers

The Prama Benchmarking module goes beyond industry-only views and vintage curves to allow lenders to view 60 months of their performance data at the MSA level. Information is available across a wide range of granular metrics and dimensions, allowing customers to compare performance to the industry and peers.

Benchmarking provides performance data on metrics such as delinquencies, charge-offs, bankruptcy, average balance and utilization. It offers views of market share in terms of number of accounts, total limit or total balance. The module also lets lenders analyze depersonalized data using dimensions such as APR, origination vintage, credit tier, state or MSA region, account status and consumer credit age.

For instance, a regional bank in Western Pennsylvania interested in growing its credit card portfolio is now able to observe five years of its own data versus other similar banks in their region. The information is accessed in minutes instead of weeks or months, allowing the bank to determine how its performance stacks up against the rest of the industry and its peers. Prama Benchmarking allows the bank to uncover opportunities within certain consumer risk segments such as subprime or prime and see if they should consider expansion into nearby geographies. By digging deeper into other readily available depersonalized data such as accounts, balances and delinquency performance, the bank can use this information to make insightful decisions to grow its credit card business.

“The breadth of data available today in Prama is light years ahead of what we have had at our disposal to date,” said Steve Miller, president of Twenty Twenty Analytics, a premier loan portfolio analytic service provider for credit unions. “We can now spend time analyzing localized or national data, as close to real-time as practical, instead of analyzing aged data or trying to get our hands on a narrow, but current data set for management decisioning. As a result, Prama helps us quickly evaluate and understand changes in the consumer credit market and provides our clients the opportunity to be more nimble in risk management and loan pricing.”

Extracting Data Faster – From a Month or More to Hours

Prama Data Extract gives TransUnion customers self-service access to obtain depersonalized archive credit data, giving the customer control over how quickly they can obtain the data they need.

“To thrive in a dynamic business environment, organizations need easy access to data to help them better understand the market and make faster, more informed decisions,” said Ginny Gomez, senior vice president in TransUnion’s innovative solutions group. “The pace of the market continues to quicken, requiring businesses to increase the speed at which they make decisions and implement strategies. To support this pace, they need real-time access to data—faster than conventional processes available today.”

A traditional archive request process – from customer order to product delivery – typically takes 30 days or more. This includes time spent defining and iterating on the customer’s data requirements. “With Data Extract, the process will take less than 24 hours – an enormous time savings,” said Gomez.

About TransUnion (NYSE: TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

]]>TransUnion,financial servicesTue, 16 May 2017 06:00:00 -0500Thousands of Military Members Already Identified as Being Covered By TransUnion’s Military Lending Act Database Search http://newsroom.transunion.com/thousands-of-military-members-already-identified-as-being-covered-by-transunions-military-lending-act-database-search/
http://newsroom.transunion.com/thousands-of-military-members-already-identified-as-being-covered-by-transunions-military-lending-act-database-search/Approximately one month after the commencement of the new Military Lending Act requirements, TransUnion’s (NYSE: TRU) Military Lending Act Database Search has returned thousands of matches to lenders indicating consumers may be covered by the statute.

The Military Lending Act (MLA) and 2015 Final Rule were passed to protect service members and their families. The rules, which went into effect on Oct. 3, 2016, impact many loan types and impose new requirements upon lenders to both identify and take specific actions with respect to covered borrowers.

Under the MLA and Final Rule:

Lenders are required to verify if a consumer is covered under MLA.

36% is the maximum military annual percentage rate (MAPR) for military members and their covered dependents.

The Military Lending Act Database Search from TransUnion is a fully compliant suite of products that can be used to verify consumer eligibility, and has already helped thousands of lenders comply with the MLA.

]]>financial services,Military Lending Act,MLAFri, 11 Nov 2016 06:00:00 -0600TransUnion’s Prama Analytics Finds Energy-Reliant States Still Underperforming the Nation, While Recent Vintage Credit Card Loans Performing Worsehttp://newsroom.transunion.com/transunions-prama-analytics-finds-energy-reliant-states-still-underperforming-the-nation-while-recent-vintage-credit-card-loans-performing-worse/
http://newsroom.transunion.com/transunions-prama-analytics-finds-energy-reliant-states-still-underperforming-the-nation-while-recent-vintage-credit-card-loans-performing-worse/New data powered by TransUnion’s PramaSM analytics found that more recent vintage credit cards are performing worse than those issued earlier. Serious credit card delinquencies for energy-reliant states also continue to see larger yearly percentage increases. The latest findings, including data through the end of September 2016, were released at the Money 20/20 Conference in Las Vegas.

“The third quarter of 2016 is only a few weeks past, yet we are already able to see Q3 trends in the credit card marketplace via our Prama environment that could impact the lender-consumer dynamic,” said Paul Siegfried, senior vice president and credit card line of business leader at TransUnion. “In particular, we see underperformance of newer vintage cards compared to those from past years, despite the general improvement in the economy over time. We believe these increases are being driven in large part by the recent expansion of card credit by issuers to non-prime consumers, and the related growth of balances on those cards.”

TransUnion’s Prama Insights Vintage Analysis shows that the 90-day delinquency rate of credit cards six months after origination stands at 2.95% for 2015 originations, in contrast to 2.18% for the 2014 cohort and 1.50% for 2013.

As recent vintage delinquencies rise, the national average for serious credit card delinquency across all cohorts increased to 1.53% in Q3 2016. This is the highest level observed during the third quarter since a Q3 2012 reading of 1.65%. TransUnion analyzes year-over-year metrics to account for seasonality. “While we are seeing a slight uptick in credit card delinquencies, it should be noted that the current reading is nearly half of the almost 3% delinquency rate of Q3 2009,” added Siegfried.

Energy States Continue to See Rising Delinquencies

Earlier this year, TransUnion conducted an analysis of energy state performance, which found that states such as Oklahoma, Texas, West Virginia and Wyoming were experiencing elevated levels of delinquency compared to the rest of the nation. Six months later, credit card delinquency rates for these energy-sector states continue to grow faster than the rest of the U.S.

Energy State Credit Card Delinquency Performance –

Yearly Serious Delinquency Percentage Increase/Decrease

Credit Product

Years

U.S.

Oklahoma

Texas

West Virginia

Wyoming

Serious Credit Card Delinquency % Change

Q3 2014 – Q3 2015

6.7%

15.9%

11.4%

9.5%

9.7%

Q3 2015 – Q3 2016

6.3%

11.9%

10.2%

15.6%

20.4%

Energy states have also seen debt levels rise up to 5% between Q3 2015 and Q3 2016—higher than the national average. National credit card debt per borrower rose 1.8% from $5,229 in Q3 2015 to $5,323 in Q3 2016.

“The yearly percentage increase in credit card delinquencies continues to rise for energy dependent states,” said Siegfried. “Many of these states may see continued pressure on their delinquency rates for at least two or three quarters after oil prices finally rise significantly. There is generally a lag for energy sector companies to ramp up their hiring, and for those newly employed to gain the benefit from their paychecks in catching up on past-due debt service obligations.”

“These two trends—the vintage dynamic and the energy sector delinquency effect—are a great illustration of the diverse forces that impact the consumer card market,” continued Siegfried. “The former is due largely to strategic choices by card issuers, while the latter is a result of economics. It is the interaction of these types of forces that make the lending marketplace challenging to understand without the right data and analytical tools.”

Prama Analytics Allows Lenders To Explore Latest Credit Trends

Given the constantly evolving lending market, earlier this year TransUnion launched Prama, a groundbreaking suite of solutions changing how companies explore data and act on insights. Prama puts the power of broad, deep depersonalized data and the reliability of superior analytics at the customer’s fingertips--giving them the information they need to make better decisions at the speed their business demands.

The Prama suite of solutions currently consists of Prama Insights and Prama Studio. Prama Insights includes two modules – Market Insights and Vintage Analysis. The Market Insights module provides quarterly views on key lending metrics at a state, regional and national level. The Vintage Analysis module allows users to view seven years of their own depersonalized performance data spanning the life of each loan (i.e. delinquency, charge-offs, bankruptcy) and to benchmark their performance against the industry and their peers.

TransUnion recently began offering its first module for Prama Studio – Attribute Manager. Attribute Manager allows customers to develop attributes, modify attribute definitions, and centralize the development and management of attributes. This allows them to achieve efficiency through standardization and reuse of attributes across various models and lines of business.

“A recent study found that seven in 10 lenders wish they had direct, immediate self-service visibility into their analytics, and we believe the Attribute Manager module will help lenders better determine how they can react to new data sets such as our latest findings about energy reliant states,” said Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit. “Attribute Manager gives all types of lenders the ability to better compete against their peers by extracting more value from data to meet their growth, risk and compliance goals.”

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

]]>financial servicesMon, 24 Oct 2016 08:00:00 -0500TransUnion Ranks No. 29 on American Banker’s FinTech Forward 100 Listhttp://newsroom.transunion.com/transunion-ranks-no-29-on-american-bankers-fintech-forward-100-list/
http://newsroom.transunion.com/transunion-ranks-no-29-on-american-bankers-fintech-forward-100-list/TransUnion announced today that it has been awarded the No. 29 ranking on American Banker and BAI’s FinTech Forward 100 list. FinTech Forward, now in its 13th year, is the industry standard for global rankings of the top FinTech providers. A central objective of the FinTech Forward program is to identify the forces and trends that are motivating banks’ technology investments.

The introduction of several industry-leading solutions contributed to TransUnion’s ranking on the FinTech Forward list. Most notably, TransUnion launched PramaSM, a suite of solutions changing how companies explore data and act on insights. Prama includes anonymized information on virtually every credit active consumer in the U.S. and uses advanced technologies and analytics to give customers the ability to make more informed decisions.

In addition to its innovative Prama environment, TransUnion was the first credit reporting agency to bring trended consumer credit data to market with its CreditVision® suite of solutions. In late September, Fannie Mae began requiring the use of credit reports that support trended credit data from CreditVision.

TransUnion’s FinTech Forward honor comes on the heels of its No. 35 ranking in the IDC Financial Insights FinTech Top 100. TransUnion also placed sixth this year in the InformationWeek Elite 100, recognizing the company as one of the nation’s most innovative IT organizations for the implementation of its Shared Analytical Processing Environment (SHAPE).

]]>financial services,FinTech,EnterpriseWed, 05 Oct 2016 04:55:00 -0500TransUnion Selected to Participate at FinovateFall 2016http://newsroom.transunion.com/transunion-selected-to-participate-at-finovatefall-2016/
http://newsroom.transunion.com/transunion-selected-to-participate-at-finovatefall-2016/Prama Analytics Environment to be featured among Emerging Fintech SolutionsTransUnion (NYSE:TRU) today announced that it has been selected to showcase its PramaSM suite of solutions at FinovateFall 2016 in New York City, on September 8-9, 2016.

The Finovate series of global events showcases an elite group of the most cutting-edge Fintech products and services, helping decision makers in the financial services industry, including banks, credit unions and online lenders, understand emerging technologies.

"We are delighted to have TransUnion as a presenter at FinovateFall 2016. We are excited to showcase Prama analytics and the capabilities it brings to lenders," said Greg Palmer, Sr. Event Director of Finovate.

FinovateFall is a demo-based conference for innovative startups and established companies in the fields of banking and financial technology. Held in Manhattan, the event offers an insight-packed glimpse of the future of finance via a fast-paced, intimate, and unique format. FinovateFall is organized by The Finovate Group. For more information on the event or to view videos of previous demos, please visit finovate.com.

About TransUnion (NYSE: TRU)

Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

We call this Information for Good. http://www.transunion.com/business

]]>Prama,financial services,FinovateThu, 04 Aug 2016 05:00:00 -0500TransUnion: As Competition Heats Up for New Borrowers, Lenders May Look to Alternative Data to Assess New Credit Populationshttp://newsroom.transunion.com/transunion-as-competition-heats-up-for-new-borrowers-lenders-may-look-to-alternative-data-to-assess-new-credit-populations/
http://newsroom.transunion.com/transunion-as-competition-heats-up-for-new-borrowers-lenders-may-look-to-alternative-data-to-assess-new-credit-populations/A recent TransUnion (NYSE: TRU) survey found that three in four lenders said it is increasingly difficult to find and acquire new customers. Nearly 75% said they are challenged by a continued low interest rate environment, which is spurring more competition for a pool of consumers who receive multiple credit offers.

The survey results are in line with TransUnion data that show there were more than 26 million additional auto, credit card and personal loan accounts in 2015 compared to 2014. Yet, according to the Consumer Financial Protection Bureau, at least 45 million U.S. consumers are still not able to access credit because they either have no credit report or have insufficient credit histories.

TransUnion’s survey of 317 lenders, conducted by third-party research firm Versta Research, shows how alternative data may be leveraged to better assess risk and price offerings appropriate both for unbanked, unscored consumers and for traditionally prime borrowers.

According to TransUnion’s survey, 87% of lenders say they decline some credit applicants because they cannot be scored. Yet 83% of those using alternative data to score credit applicants report seeing tangible benefits. Nearly two in three lenders (64%) say they have seen tangible benefits within the first year of using alternative data.

Three in four survey respondents said they expect alternative data will bring about positive economic changes. Other key benefits derived from alternative data, according to survey respondents, include:

66% of lenders using alternative data say it is helping them reach more creditworthy consumers in their current markets.

56% of lenders using alternative data say the data has opened up new markets.

87% of lenders using alternative data do so to evaluate thin-file or no-file consumers.

67% use alternative data to evaluate non-prime borrowers.

Last October, TransUnion released CreditVision® LinkSM, the first credit score in market to combine both trended credit bureau data and alternative data sources. CreditVision Link enables lenders to score up to 95% of the U.S. adult population. It also allows more than 60 million traditional “no-hits” and unscorable records to be scored.

“TransUnion is the first single source of scores with both trended credit and alternative data, and in just the last few months, we have seen immense interest from lenders in reaching consumers who may not have been traditional prospects,” said Mike Mondelli, TransUnion’s senior vice president of alternative data services.

Whereas a traditional credit report offers a glimpse of a consumer at a snapshot in time, trended data assets leverage an expanded view of credit data with up to 30 months of historical information. This includes information on each loan account, including payment history, such as dollars paid, amount paid vs. minimum due and the total amount borrowed over time. “This is especially important because a traditional credit report may tell you a consumer has $5,000 in credit card debt, but one using trended data will show you whether they have built up or paid down that balance over time,” added Mondelli.

On the debt front, aggregate revolving credit balances increased by $13.5 billion between Q3 2014 and Q3 2015. Non-revolving debt also rose by $249.5 billion over the same period. At the consumer level, however, average revolving balances decreased by 3.9% in the last year to $10,931 in Q3 2015. This decline at the consumer level was driven in part by increased access to credit by non-prime consumers, who generally have lower credit limits. Non-revolving debt per consumer also decreased by 0.3% over the year, ending at an average of $113,973 per consumer in Q3 2015.

Consumer Delinquency and Debt Changes in the Last Year

Loan Type

Q3 2015 Serious Delinquency Rate

Yearly Pct. Change

Q3 2015

Debt Per Borrower

Yearly Pct. Change

Mortgage

2.40%

(-28.5%)

$189,039

1.5%

Auto

1.16%

0.0%

$17,942

3.4%

Credit Card

1.43%

6.7%

$5,232

(-0.3%)

These results, along with the findings discussed below, were reported in the latest TransUnion Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

Auto loan balances for the subprime risk tier (those consumers with a VantageScore® 3.0 credit score lower than 601) remain the smallest segment with 15.3%, or $154 billion, of the total balance. However, this is the highest share of auto balance observed for the subprime risk tier since Q1 2011. Consumers in the prime or better risk tiers (those with a VantageScore® 3.0 credit score higher than 661) represent $670 billion of the $1 trillion in balances.

The average balance across all auto loan accounts was $14,515 in Q3 2015, a 2.7% increase year-over-year, and the slowest pace of average balance growth since Q4 2011. The average subprime auto loan balance increased 4.2% from $13,328 in Q3 2014 to $13,890 in Q3 2015, the lowest growth rate since early 2012.

As balances increase, auto loan delinquencies (the rate of borrowers 60 days or more delinquent on their auto loans) continue to remain flat – remaining at 1.16% in both Q3 2014 and Q3 2015.

Nearly 75 million consumers have an open auto account, an increase of 5 million since Q3 2014 (69.5 million). The number of consumers with access to an auto loan grew 2 million quarter over quarter from 72.5 million in Q2 2015.

“More consumers have access to auto loans, yet delinquencies remain low as they continue to responsibly manage their payments,” said Laky. “Consumers are taking on more and bigger auto loans in today’s low-rate environment, but we see no cause for concern as delinquencies remain steady.”

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), new auto loan originations exceeded 7 million for the first time in Q2 2015. Up 13.5% from Q1 2015 and 6.4% from Q2 2014, originations reached 7.3 million this past quarter.

Along with origination growth, the average new auto loan balance grew to $20,016 in Q2 2015. The average balance increased $567 from the average balance in Q2 2014 of $19,449. New subprime auto loan balances increased 3.7% year-over-year from $16,781 in Q2 2014 to $17,357 in Q2 2015.

TransUnion Insights: Inside the Credit Card Market

TransUnion’s report found that credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included), reached the highest level since Q3 2009. Total originations reached 15.2 million, a 12.2% increase from 13.5 million in Q2 2015. “Credit card originations are increasing at a faster pace in the last year, indicating that consumers have an appetite for credit,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion.

The credit card delinquency rate (the rate of borrowers 90 days or more delinquent on their general purpose credit cards) rose nearly 7% from 1.34% to 1.43% in Q3 2015. The delinquency rate, though, remains in a similar range to what has been observed the last few years and is nearly half of the Q3 2009 reading of 2.76%.

Total bankcard balances in Q3 2015 grew 4.7%, reaching $637 billion. Balances were nearly $30 billion lower in Q3 2014, when the total balance was $608 million. On a quarterly basis, total balances grew 2.4%, up from $622 million in the prior quarter.

The number of consumers with credit cards reached 130.8 million in Q3 2015, a 4.3% increase from 125.4 million consumers in the prior year same quarter.

Consumers in the non-prime (those consumers with a VantageScore® 3.0 credit score of 660 or below) risk tier contributed to the growth in credit card access, with 33 million more consumers gaining access to credit in Q3 2015. Non-prime consumers’ access to credit cards grew in the last year by 25.3%.

While the average new credit line grew for all risk tiers in Q2 2015 (also viewed one quarter in arrears to ensure all accounts are reported and included in the data), subprime consumers experienced an increase in average new credit line for the first time since Q2 2014. New subprime credit lines increased 0.7% to $995 in Q2 2015.

New super prime credit lines experienced the largest growth in the second quarter at 8.4%. The average new credit line for super prime consumers reached $10,576 in Q2 2015, up from $9,759 in Q2 2014. On a quarterly basis, the average new credit line for these consumers remained steady from $10,566 in Q1 2015.

TransUnion Insights: Inside the Mortgage Market

The latest Industry Insights Report found that the mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) declined nearly 30% from 3.36% in Q3 2014 to 2.40% in Q3 2015. The delinquency rate has now declined 65% from its Q1 2010 peak of 6.94%.

All age groups dropped in delinquency roughly equally, in the 27% to 30% range. Both millennials and the 60+ age groups are the least risky consumer groups, with delinquency rates of 1.62% and 1.77%, respectively.

Every state across the board experienced yearly declines in their mortgage delinquency rate. Of note, Florida’s mortgage delinquency rate dropped the most of any state in the last year from 6.42% in Q3 2014 to 3.75% in Q3 2015.

The top 10 MSAs by population all showed a dramatic decrease in year-over-year delinquency rates, averaging a 33% drop, with Miami and San Francisco declining more than 40%.

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), TransUnion found that mortgage originations (by loan count) in Q2 2015 maintained last quarter’s robust growth. At 2.01 million, mortgage originations have increased nearly 40% in the last year. As a comparison point, since a post financial crisis origination low in Q2 2011, the nation has averaged a quarterly origination rate of 1.80 million.

The trend of super prime and prime plus consumers leading the pack in mortgage origination growth continues, with 50% and 40% year-over-year increases observed. However, prime, near prime and subprime populations also showed meaningful growth at approximately 30% each.

“This is now the third straight quarter where we’ve not only seen year-over-year mortgage origination growth, but also significant increases in the higher risk populations of near prime and subprime—hinting at a loosening of credit and/or a change in the mix of borrowers seeking mortgages,” said Mellman.

]]>IIR,credit card,auto,mortgage,Information+for+Good,financial services,auto loanMon, 16 Nov 2015 05:00:00 -0600TransUnion’s Trended Data to Support Fannie Mae Mortgage Initiativehttp://newsroom.transunion.com/fannie-mae/
http://newsroom.transunion.com/fannie-mae/Trended data can improve risk analysisTransUnion (NYSE:TRU), the first credit reporting agency to bring trended consumer credit data to market with its CreditVision® suite of solutions, applauds Fannie Mae’s decision to utilize this enhanced information in the assessment of mortgage applicants. While details of Fannie Mae’s plan are still forthcoming, their use of trended credit data, starting in mid-2016, has the potential to benefit mortgage borrowers by providing Fannie Mae and mortgage lenders a more comprehensive view of a borrower’s historical credit performance.

“CreditVision is an innovation that has had a dramatic impact on how lenders utilize credit information within their lending strategies. The use of trended credit data by mortgage lenders has the potential to help millions of people access the opportunities that lead to a better quality of life,” said Jim Peck, TransUnion’s president and chief executive officer. “As a global leader in risk and information solutions, we recognize the importance and benefits of using information for good.”

A recent TransUnion analysis found that the use of trended data can potentially impact vast numbers of consumers in the housing market through better pricing and access to mortgage loans. TransUnion research indicates that the percentage of consumers in the Super Prime risk tier, who generally have the greatest access to new loans at the lowest pricing, would increase from 12% of the population to nearly 21%.

TransUnion began work on bringing trended credit data to market more than five years ago, and launched CreditVision – the first-ever suite of solutions to utilize such data – in January 2013. Internationally, TransUnion has launched its trended credit data solution in Canada and Hong Kong and the capability is also being pursued in many additional markets across the globe. Hundreds of financial services and insurance companies have already adopted or are currently evaluating CreditVision solutions with many of them experiencing substantial performance lift in underwriting, acquisition and account management strategies. These improvements have allowed lenders to approve more consumers for credit while offering better loan terms based on the improved insights.

Trended Credit Data

TransUnion’s CreditVision suite of solutions helps to enhance lending decisions by leveraging an expanded view of credit data that includes up to 30 months of historical payment amounts and credit performance, where available, on loan accounts. CreditVision risk scores include the addition of actual payment amounts and trended data on accounts, data that are new to the credit report and not included in any other traditional risk scores today.

This expanded view of credit data can reveal trends and behaviors, such as consumers making on-time payments, paying more than the minimum amount due on credit cards and installment loans, reducing total amounts borrowed or decreasing utilization over time. These trends cannot be seen on standard versions of the consumer credit report or by any of the traditional risk scores that use the more limited credit report.

“The majority of lenders have been reporting actual payment amount to TransUnion on a consistent basis, and we’re pleased to see this trend,” said Peck. “Now innovative lenders are able to use this information as an additional insight and powerful component in their underwriting strategies. This means borrowers who do business with these lenders could realize improved access to credit. We commend Fannie Mae’s decision to incorporate these data elements within the mortgage lending process.”

Adding Alternative Data

TransUnion also released CreditVision® LinkSM in October of this year, the first credit score in market to combine both trended credit bureau data and alternative data sources – creating a more precise picture of consumer risk and their ability to manage financial commitments in a single point. CreditVision Link allows lenders to score approximately 95% of the U.S. adult population, including tens of millions of consumers who cannot be scored by traditional credit scores. Over 40 lenders have assessed or are currently assessing this score.

“TransUnion is innovating with a broad array of solutions that combine these data elements – such as trended and alternative data – with new TransUnion technologies and analytics to help lenders make better decisions and ultimately evaluate more consumers,” said Steve Chaouki, executive vice president in TransUnion’s financial services business unit. “At TransUnion, we are proud to work closely with our lending customers to help them serve the millions of Americans seeking a better life for themselves and their families. Solutions like CreditVision and CreditVision Link can help broaden the banked populations and help to expand consumer choice.”

About TransUnion (NYSE: TRU)Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.

]]>financial services,EnterpriseMon, 19 Oct 2015 08:35:00 -0500TransUnion: 1.5 Million Homeowners Negatively Impacted by Mortgage Crisis Could Re-Enter Housing Market in Next Three Years http://newsroom.transunion.com/transunion-15-million-homeowners-negatively-impacted-by-mortgage-crisis-could-re-enter-housing-market-in-next-three-years/
http://newsroom.transunion.com/transunion-15-million-homeowners-negatively-impacted-by-mortgage-crisis-could-re-enter-housing-market-in-next-three-years/More than 1.5 million home buyers negatively impacted by the financial crisis could potentially re-enter the mortgage market in the next three years, according to a new study from TransUnion. This population of consumers negatively impacted by the financial crisis – commonly known as boomerang buyers – was defined by TransUnion as being 60+ days delinquent on a mortgage loan, having lost a mortgage through foreclosure, short sale or other non-satisfactory closure, or having a mortgage loan modification.

TransUnion’s study found that approximately 700,000 boomerang buyers may be able to re-enter the housing market in 2015. Over the next five years, TransUnion anticipates 2.2 million boomerang buyers could re-enter the market.

The study analyzed the overall U.S. credit-active population at the end of 2006 (the end of the mortgage Bubble), the end of 2009 (the end of the Burst) and in 2014 to determine consumers’ ability to re-enter the mortgage market.

TransUnion analyzed, on a depersonalized basis, every consumer it could longitudinally track between 2006 and 2014, which came to 180 million consumers. During the mortgage Bubble in 2006, 43% of that population, or 78 million consumers, had a mortgage. Approximately 8% of these consumers had a negative impact on their mortgage – 60+ days delinquent, foreclosure, etc. – between the Bubble and Burst.

TransUnion analyzed this impacted population of 7 million consumers to determine how many consumers had recovered to meet agency credit underwriting guidelines by the close of 2014. The study found that only 18% of consumers impacted had recovered by December 2014. However, the study found that 2.2 million of the remaining 5.7 million unrecovered consumers could meet agency underwriting guidelines over the next five years.

Consumers Who Could Meet Agency Selling Guidelines in the Next Five Years

2015

2016

2017

2018

2019

700,000

300,000

500,000

400,000

300,000

According to TransUnion’s study, 42% of the recovered consumers currently have a mortgage, while 58% of the recovered consumers have not yet re-entered the mortgage market.

“As boomerang buyers who experienced foreclosures or other negative impacts become eligible to re-enter the mortgage market, they may not immediately do so if they are not aware they are eligible again, or feel daunted by their prior experience,” Mellman said. “Lenders can help consumers ease this transition with credit education programs addressing consumer eligibility, and help them better understand their borrowing options.”

Credit Score Impact

The study also looked at how big of an impact the mortgage crisis had on consumer credit scores. Between the Bubble and the Burst, 39 million consumers dropped at least one credit score tier. As of 2014, 16 million of these consumers had recovered sufficiently to reach at least the risk tier they were in before the Burst.

Despite the significant impact on consumer credit scores, a marked improvement in scores has also been observed for certain credit score risk tiers. The study found that 7 million more consumers have moved into prime or better risk categories (VantageScore® 3.0 credit score of 661 and above) between the Burst in 2009 and the close of 2014. Additionally, 8 million consumers left the subprime risk tier (VantageScore® 3.0 credit score of 600 or below) to enter higher risk tiers during the same timeframe.

Credit Risk Tier Distribution of Consumers from Bubble to Present

Bubble (2006)

Burst (2009)

Current (2014)

Super Prime (780+)

45 million

49 million

53 million

Prime Plus (721-780)

35 million

32 million

31 million

Prime (661-720)

29 million

26 million

30 million

Near Prime (601-660)

24 million

24 million

25 million

Subprime (600 and below)

47 million

50 million

42 million

*Credit scores are based on VantageScore® 3.0 risk tiers

“An important question lenders face is when to re-engage with consumers who have been challenged managing credit in the past. Despite the negative impact of the mortgage crisis on many consumers, we’re seeing promising recovery as consumers shift to lower risk tiers,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “The pronounced decline in the number of subprime consumers indicates that time has diminished the impact of Burst-era derogatory items on consumer credit. While some lenders may be hesitant to offer loans to these impacted consumers, our data show these consumers are becoming better credit risks. Our study puts a framework around the re-engagement question relative to the mortgage crisis, and that’s good news for both lenders and consumers alike.”

]]>TransUnion,mortgage,financial servicesWed, 17 Jun 2015 05:00:00 -0500TransUnion: Auto Loan Delinquencies Remain Steady As Access to Loans Keeps Increasinghttp://newsroom.transunion.com/transunion-auto-loan-delinquencies-remain-steady-as-access-to-loans-keeps-increasing/
http://newsroom.transunion.com/transunion-auto-loan-delinquencies-remain-steady-as-access-to-loans-keeps-increasing/More than 71 million consumers had an auto loan in Q1 2015, an increase of 1.2 million from Q1 2014 and the largest growth since the Great Recession, according to TransUnion’s latest auto report. Consumers under age 30 experienced the largest increase, with 8.5% year-over-year growth.

In Q1 2015, auto loan delinquency rates (the ratio of borrowers 60 days or more delinquent on their auto loans) remained steady at 0.99%, unchanged from Q1 2014. On a quarterly basis, the delinquency rate dropped from 1.16% in Q4 2014, a decline of 14.6%.

“Even as more consumers have access to an auto loan or lease, we’re seeing a continued low level of delinquencies on a year-over-year and quarterly basis,” said Jason Laky, senior vice president and automotive business leader for TransUnion.

Auto loan debt per borrower rose 3.8% from $16,865 in Q1 2014 to $17,508 in Q1 2015. On a quarterly basis, auto loan debt increased from $17,453 in Q4 2014, marking the 16th straight quarter of increases. Auto loan balances rose in every state from Q1 2014 to Q1 2015. Among the nation’s largest cities, Atlanta (up 5.9%) and Houston (up 5.4%) experienced the largest increases in auto loan balances. Dallas, an oil-rich market, experienced a 1.7% decline in its delinquency rate, down from 1.05% in Q1 2014 to 1.03% in Q1 2015. “We have yet to see a negative impact on auto lending in the areas with high exposure to the oil industry,” added Laky. “Loans and balances continue to grow, while delinquencies continue to remain in check.”

TransUnion recorded 66.1 million auto loan accounts as of Q1 2015, up from 64.8 million in Q4 2014. On a year-over-year basis, auto loan accounts increased 8.4% from 60.9 million in Q1 2014. Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations increased 8.3% year-over-year to 6.2 million in Q4 2014, up from 5.7 million in Q4 2013.

“Following a harsh winter that dampened economic activity in parts of the U.S., the demand for auto loans remained strong,” said Laky. “The growth in both the number and size of new loans across all risk tiers reflects Americans’ continued appetite for new cars. As subprime originations grow, the delinquency rates have remained relatively steady. While lenders appear to be effectively managing risk across all credit risk tiers, consumers may also be benefitting from an improved employment environment.”

The youngest consumer group – those under age 30 – continued to experience average balance growth in Q1 2015. The average auto loan balance for this group was $14,995, up 3.1% from $14,550 in Q1 2014. The number of younger consumers with an auto loan balance also grew in Q1. Nearly 900,000 more of these consumers had an auto loan than in Q1 2014, an 8.5% year-over-year increase.

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.